August 15, 2022

Company name:
Representative:

ES-CON JAPAN Ltd.
Takatoshi Ito, President &Representative Director(TSE Prime Market, code: 8892)

Notice Concerning Submission of Business Improvement Planby ES-CON ASSET MANAGEMENT Ltd.
As announced in the July 15, 2022 news release “Notice Concerning Administrative Disposition
Against ES-CON ASSET MANAGEMENT Ltd.,” the Commissioner of the Financial Services Agency
has implemented an administrative disposition, which consist of injunctions to suspend business
operations and to institute improved practices targeting ES-CON ASSET MANAGEMENT Ltd.
(hereinafter, “EAM”), a subsidiary of ES-CON JAPAN Ltd. In response, EAM began formulating areport on improved practices (hereinafter, “Business Improvement Report”). The completed report
was submitted today to and accepted by the Commissioner of the Financial Services Agency.
ES-CON JAPAN would like to express its sincere apologies to investors and to all other affectedparties for the considerable concern and inconvenience caused by this matter.
As the parent company of EAM and the main sponsor of ESCON JAPAN REIT Investment
Corporation, for which EAM serves as asset manager, we take this administrative disposition onEAM very seriously. We intend to make every effort to prevent the recurrence of such events basedon thorough enhancement of our approaches to compliance and internal control of all members ofthe ES-CON JAPAN Group, not just at EAM, as well as the steadfast implementation ofimprovements.

* For more information of the report on improved practices prepared by the asset manager, pleaserefer to the press release “Notice Concerning Submission of Business Improvement Report by the
Asset Manager” (attached), released today by ESCON JAPAN REIT Investment Corporation.
<Inquiries Concerning this Press Release>
Administration Group PR/IR Manager Tel: +81-3-6230-9308

【Attachment】

August 15, 2022
To All Concerned Parties
Investment Corporation
ESCON JAPAN REIT Investment Corporation
Representative:
Atsumu Sasaki, Executive Director(Securities Code: 2971)
Asset Management Company
ES-CON ASSET MANAGEMENT Ltd.
Representative:
Takeharu Kagiyama
President and Representative Director
Inquiries:
Yuki Yoshida
General Manager of the Department ofFinance and Control
TEL: +81- 3-6230-9338
Notice Concerning Submission of Business Improvement Report by the Asset Manager
ES-CON ASSET MANAGEMENT Ltd. (hereinafter, the "Asset Manager"), to which ES-CON JAPAN REIT
Investment Corporation (hereinafter, "ESCON REIT") entrusts the management of its assets, received Business
Suspension Order and Business Improvement Order on July 15, 2022, as announced on the same day in the NoticeConcerning Administrative Action against the Asset Manager, and is working to improve its operations under theconsultation and guidance of the supervisory authorities.
The Business Improvement Order mentioned above requires that we report on the status of our response by August 15,
and we announce that a report summarizing the status of our business improvement measures (hereinafter, the "BusinessImprovement Report") was submitted to the Commissioner of the Financial Services Agency today and was accepted.
We deeply apologize to our unitholders and all other concerned parties for the great concern and inconvenience wehave caused.
A summary of the Business Improvement Report submitted today is shown in an attachment. However, there are also
matters regarding countermeasures that are currently under consideration and those that will be further examined in thefuture. Therefore, we will work on them as soon as possible in consultation with the Asset Manager's parent company,
ES-CON JAPAN Ltd. (hereinafter, "Parent Company"), and its ultimate parent company, Chubu Electric Power Co., Inc.
(hereinafter, "Chubu Electric Power").
Through these business improvements, the Asset Manager and Parent Company will continue to further strengthen
their legal compliance and internal control systems, as described in the Business Improvement Report, and endeavor torealize fair and appropriate business operations in order to regain the trust of all parties concerned.

【URL of ESCON REIT: https://www.escon-reit.jp/en/index.html】

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[Appendix]
Summary of the Business Improvement Report(1) To provide a satisfactory explanation of the details of this administrative action to the unitholders of ESCONREIT and carry out appropriate measures.
The details of the administrative action were announced on July 15, 2022, as a timely disclosure by ESCON REIT
in order to explain the matter to the unitholders of ESCON REIT. The details are included in the Notice Concerning
Administrative Disposition Against the Asset Manager, dated July 15, 2022.
(2) In order to realize fair and appropriate business operations as an investment corporation asset manager, toclarify its management stance regarding compliance with laws and regulations, etc., to establish responsible
compliance and internal control systems run by the management team, and to review its business operation
methods to soundly achieve these objectives.
The Asset Manager will implement the following measures based on the belief that the management team's taking
the initiative in demonstrating and practicing a strong attitude toward compliance both internally and externally andreorganizing decision-making bodies are essential as the fundamental management stance in order to work on
improvement for fair and appropriate business operations.
(2-1) Clarification of the Management Stance on Compliance with Laws and Regulations
a. In order to clarify its management stance on compliance with laws and regulations internally and externally, theAsset Manager plans to adopt and announce the "Compliance Declaration."b. In regard to the highest priorities for the interests of investors, prevention of conflicts of interest, implementationof proper governance, and fair and appropriate business operations, etc., we plan to make institutional decisions
at the Board of Directors and publicize them externally in a "Management Philosophy" and other forms.
c. Regarding this administrative action and the business improvement plan in response to it, the management teamwill issue a clear message internally and conduct comprehensive training sessions.
(2-2) Establishment of responsible legal compliance and internal control systems by management
We will establish an internal control system by strengthening the compliance system as below.
(1) Organizational changes
a. Changes in the composition of the Board of Directors
In order to make the governance system adequate to prevent influence from the Sponsor and prevent conflictsof interest, as of March 24, 2022, the Representative Director of the Parent Company resigned as a director of theAsset Manager, and the number of directors dedicated to the Asset Manager was increased from one to two. Inaddition, Hiroshi Tokunaga, a compliance officer, was appointed as a new director to further strengthen
compliance practices, emphasizing its importance as one of the essential management issues. Takeharu Kagiyama,
who has experience as the head of the real estate brokerage and real estate custody division at Mizuho Trust &Banking and has a thorough knowledge of the real estate business, has been newly appointed as RepresentativeDirector, replacing Satoshi Omori.
Minoru Nakanishi, who concurrently serves as Senior Managing Director of the parent company, is scheduled
to resign from the Asset Manager's director position as of September 26, 2022.
b. Transition to a company with Audit and Supervisory Committee
In order to ensure that the governance function of the Board of Directors is properly exercised and to strengthen2the auditing function by adding an outside director with voting rights, we have shifted from a system with one
Corporate Auditor to an Audit and Supervisory Committee system, as of June 28, 2022. Of the three directors whoare members of the Audit and Supervisory Committee, two are outside directors, one of whom is a lawyer from
the Ministry of Finance, and another is a certified public accountant and a former partner of KPMG AZSA LLC.
【Previous Directors and Auditors】
Representative Director (full time)
Director (full time)
Director (part time)
Auditor (part time)

Takeharu Kagiyama
Hiroshi Tokunaga
Minoru Nakanishi
Hiroyuki Suzuki*1【Current Directors】(As of June 28, 2022)
Representative Director (full time)
Takeharu Kagiyama (Reappointed）
Director (full time)
Hiroshi Tokunaga (Reappointed）
Director (part time)
Minoru Nakanishi (Reappointed）
Director who is a member of the Audit and Supervisory Committee (part time, external director)
Masaki Sakamoto (New)Director who is a member of the Audit and Supervisory Committee (part time, external director)
Hiroshi Matsumoto (New)Director who is a member of the Audit and Supervisory Committee (part time)
Megumi Nakadozono*2 (New)*1 Hiroyuki Suzuki, who concurrently served as the head of the internal audit office and the head of the audit committee officeof the Sponsor, resigned as an auditor of the Asset Manager on June 28, 2022.
*2 Megumi Nakadozono concurrently serves as Executive Officer and General Manager of the Administration Department ofthe Parent Company.

c. Internal Audit Department has been reorganized into a subordinate organization of the Audit and Supervisory
Committee
In order to enhance the independence of internal audits, strengthen its check-and-balance function, and give
appropriate support to the operations of the Audit and Supervisory Committee, as of June 28, 2022, the Internal
Audit Department was changed from a department directly under the Representative Director to an organization
under the Audit and Supervisory Committee. This change enables the Audit and Supervisory Committee toascertain the implementation status of internal audits in a timely manner and report to the Board of Directors.
Through this system change, we will ensure the effectiveness of internal audits and soundly implement solutions
and improvements that arise from audit results.
d. Change of Members of the Investment Committee and Compliance Committee
In order to ensure the fairness, objectivity, and propriety of the Investment Committee’s and Compliance
Committee's decision-making, as well as strengthen checks and balances regarding conflicts-of-interest
transactions and ensure the propriety of the Asset Manager's operations regarding real estate appraisals, themembers of the Investment Committee and the Compliance Committee have been reviewed and changed.
After reviewing the system, we changed the composition of the Investment Committee, adding one new external
member with extensive investment management experience and knowledge of real estate investment management
decisions, in addition to the long-serving external member who is a real estate appraiser. And we appointed thenew external member as chairperson. The chairperson of the Investment Committee (external member) has vetopower, and any resolution at the committee meeting requires the approval of the two external members. An
additional change has been made in order to create a more compliance-conscious structure, adding a new Deputy

3General Manager of the Compliance Department dedicated to the Asset Manager as a member of the Investment
Committee and the Compliance Committee.
【Previous Members of the Investment Committee】
Chairperson (Representative Director)
Member (External member as real estate appraiser)
Member (General Manager of Reit Asset Management Dept.)
Member (General Manager of Fund Asset Management Dept.)
Member (Division Director of Finance and Control Dept.)
Member (General Manager of Finance and Control Dept.)
Member (Compliance Officer)

Takeharu Kagiyama
Etsuto Kimura
Atsumu Sasaki*1
Yuji Ogawa*2*4
Katsushi Wakayama
Yuki Yoshida
Hiroshi Tokunaga*3【Current Members of the Investment Committee】(As of June 1, 2022)
Chairperson (External member as chairperson)
Member (External member as real estate appraiser)
Member (Representative Director)
Member (General Manager of Reit Asset Management Dept.)
Member (General Manager of Fund Asset Management Dept.)
Member (Division Director of Finance and Control Dept.)
Member (General Manager of Finance and Control Dept.)
Member (Compliance Officer)
Member (Deputy General Manager of Compliance Dept.)

Tetsuya Saito
Etsuto Kimura
Takeharu Kagiyama
Atsumu Sasaki*1
Yuji Ogawa*2*4
Katsushi Wakayama
Yuki Yoshida
Hiroshi Tokunaga*3
Noboru Kohara*3*1 For the purpose of information compartmentalization, the General Manager of Reit Asset Management Department isexcluded from the Committee for matters proposed by the Fund Asset Management Department, and the General Managerof Reit Asset Management Department does not have voting rights on matters proposed by the Fund Asset ManagementDepartment.
*2 For the purpose of information compartmentalization, the General Manager of Fund Asset Management Department isexcluded from the Committee for matters proposed by the Reit Asset Management Department, and the General Managerof Fund Asset Management Department does not have voting rights on matters proposed by the Reit Asset Management
Department.
*3 Hiroshi Tokunaga is obligated to attend the meetings but does not have voting rights. Noboru Kohara has no voting rights.
*4 Yuji Ogawa retired on August 8, 2022 and was replaced by Maya Ikematsu as General Manager of Fund Asset Management
Department.

【Previous Members of the Compliance Committee】
Chairperson (Compliance Officer)
Member (External member as attorney)
Member (Representative Director)

Hiroshi Tokunaga
Yusuke Aso
Takeharu Kagiyama【Current Members of the Compliance Committee】(As of May 30, 2022)
Chairperson (Compliance Officer)
Hiroshi Tokunaga
Member (External member as attorney)
Yusuke Aso
Member (Representative Director)
Takeharu Kagiyama
Member (Deputy General Manager of Compliance Dept.)
Noboru Kohara(2-3) Review of Business Operation Methods
After the organizational changes, we will put the following operations into practice in the new organization.

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a. Board of Directors- Formulate a business improvement plan in response to the administrative action, and soundly implement andmonitor the plan.
- Formulate the necessary rules.
- Make specific property acquisitions a matter to be decided by the Board of Directors.
b. Audit and Supervisory Committee- Take responsibility for auditing the directors' execution of duties, and monitor whether the directors are properlyexecuting their duties with regard to the formulation of a business improvement plan in response to theadministrative action, as well as the sound execution and monitoring of the plan.
- Cooperate with the Internal Audit Department and the Compliance Department to monitor whether the business
improvement plan is being properly implemented internally.
- Attend meetings of the Investment Committee and the Compliance Committee as observers as necessary, andaudit the status of the directors' execution of their duties in relation to the sound implementation of the business
improvement plan.
c. Improvements to the management of the Compliance Committee, Investment Committee, and ESCON REIT
Board of Directors
With regard to decisions on property acquisitions, provide sufficient explanations prior to the stage ofconsidering an acquisition, and prepare and store the minutes of meetings with more appropriate content.
(3) To investigate the causes of this incident and then formulate concrete measures to prevent a recurrence,including establishing an adequate framework for managing conflicts of interest, such as clarifying internal
processes for verifying the appropriateness of decision-making related to the investment management business.
(3-1) Causes of this incident
The direct cause of this incident is that until now, the Asset Manager and the Parent Company have had an extremely
low level of awareness regarding the fulfillment of their duty of loyalty to give top priority to the interests of their investors.
As a result, the Asset Manager failed to eliminate the influence of the Parent Company, and gave top priority to acquiringproperties at the purchase price desired by the Parent Company, thereby engaging in improper conduct. We also recognize
the following things as causes. Governance did not function adequately in the Asset Manager's organization. The system
for monitoring and supervising transactions with interested parties was inadequate. The Asset Manager's executives andstaff, including its management team, lacked awareness regarding compliance with laws and regulations. And its humanresources were insufficient.
Based on the causes of this incident, we will take the following measures to prevent a recurrence.
(3-2) Measures to Prevent a Recurrencea. Changes to the ordering work rules of real estate appraisal services
The department directly responsible for ordering real estate appraisals will prepare the business rules in the formof an operations manual for property acquisitions and add new rules.
b. Strengthen monitoring of operations for the ordering of real estate appraisals by the Compliance Department
In order to strengthen the function of the Compliance Department to check and supervise the department
responsible for ordering real estate appraisals, we will stipulate the monitoring by the Compliance Department in theinternal rules (Property Acquisition Business Manual).
c. Clarification of internal processes for verifying the appropriateness of decision-making related to the investment
management businessIn order to grasp, adequately check, and supervise the actual status of the operations of the department that carries

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out property acquisitions, we will clarify the matters to be deliberated at the meetings of the Compliance Committee
and the Investment Committee.
d. Establishment of a new interested party transaction system for real estate transactions with the Parent Company
To ensure a place for equal negotiations and prevent the influence of the Parent Company in negotiations with theParent Company, we will discuss with the Parent Company and establish common negotiation rules for real estatetransactions pertaining to the Parent Company and other interested parties in the ESCON Group.
e. Securing Human Resources
To ensure the retention of human resources, the management team will internally express and promote an emphasison operational efficiency, education, and training.
f. Further investigation of the cause of the incident and enhancing measures to prevent recurrence in cooperation withChubu Electric Power and the Parent Company
We will work on clarifying the facts and further investigating the cause of this incident in cooperation with Chubu
Electric Power and the Parent Company, using the knowledge of outside experts. And based on the results, we willfurther enhance our internal control systems and measures to prevent a recurrence.
g. Maximize the use of the Chubu Electric Power Group's joint helpline
By making all executives and employees of the Asset Manager thoroughly aware of the Chubu Electric PowerGroup Joint Helpline once again, we will work to maximize the use of this system so that the executives andemployees can use it without hesitation and thereby prevent illegal and improper acts.
h. Training and awareness-raising for ongoing improvement of the conflict-of-interest management system
We will conduct various training programs to continuously improve our conflict-of-interest management system.
We will conduct proficiency tests as appropriate to measure the effectiveness of training.
(4) To clarify where responsibility lies, including that of management, based on the results of this inspection.
Of the three previous directors, Representative Director Satoshi Omori and Director Takatoshi Ito, who concurrentlyserves as Representative Director of the Parent Company, resigned on March 24, 2022. In addition, Minoru Nakanishi,Senior Managing Director of the Parent Company, is scheduled to resign from the Asset Manager's Director position
on September 26, 2022. Successor candidates are yet to be determined.
Atsumu Sasaki, Senior Executive Officer and General Manager of the Reit Asset Management Department, isscheduled to resign from his position as an Employee Specified by a Cabinet Order (Supervisor of Investment Decision
Making Operations) by September 2022, once a successor who fulfills the requirements is in office.

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